Interest Rates Introduction

youves' interest rate feature aims to fine-tune the supply and demand of the youves tracker tokens so that the price of for example a youves tracker token closely matches its reference price.

The platform will change the level of interest rates on both assets (balances of youves tracker tokens in wallets and in the savings pools and liabilities (outstanding youves tracker tokens in vaults) to manage the attractiveness of holding tracker tokens of each type with the goal of staying close to the target price of the soft peg. The two interest rates on assets and liabilities are calculated per second and they move in parallel, whereby for each tracker token the liability interest rate is higher than the asset interest rate by a fixed difference of about 3.16E-10. This is roughly equivalent to a difference 1.0% in annual interest rates.

All things equal, higher interest rates make holding and saving a youves tracker token relatively more attractive and having outstanding youves tracker tokens relatively less attractive. The opposite is true for lower interest rates.

Please note that the asset interest rate is calculated on the total balances of youves tracker tokens of one type, however, it is only paid out proportionally to youves tracker tokens which are staked in the savings pool for that type.